Home / Companies / Company-results /  Bajaj serves ultimatum to its striking workers in Chakan

Pune: Bajaj Auto Ltd has served an ultimatum to the striking employees at its Chakan plant in Pune to return to work in a week, failing which the two-wheeler maker will temporarily shift part of the production to its other factories.

“We are losing patience now," Rajiv Bajaj, managing director at Bajaj Auto, told reporters at the company’s headquarters in Akurdi near Pune on Monday. “I cannot stake sales (motorcycle sales) from the plant in the second half as well."

If the workers refuse to get back to work unconditionally, Bajaj Auto will have no option but to shift half of its production at the Chakan plant to Waluj in Aurangabad in a “semi-permanent way" and might have to eventually issue a voluntary retirement scheme (VRS) to half the workforce, Rajiv Bajaj said, adding he has given his team time till next Monday to resolve the crisis. About half of the employees at the Chakan plant has been coming to work, the company claimed.

The plan to transfer work to other factories may prevent an erosion of Bajaj Auto’s market share in the two-wheeler segment, analysts say.

“So far they (Bajaj Auto management) have managed sales and production quite well. Having said that, this cannot go on for ever. Considering they have a slew of new models lined up for the launch in the coming months, a disturbance at one of its main plants would have an adverse impact on the plans. It can lead to a potential loss of market share and competition can take advantage of it," said Mahantesh Sabarad, senior vice-president (equity research) at domestic brokerage Fortune Equity Brokers (India) Ltd.

Workers at Bajaj Auto’s Chakan plant have been on strike since 25 June over the issue of wage hikes and the allotment of discounted company shares to employees. The Vishwa Kalyan Kamgar Sanghatana (VKKS) labour union wants Bajaj Auto to allot 500 shares each to all workers at a price of 1 per share, besides a wage hike and better working conditions.

Bajaj Auto has rejected the demands for shares and maintained it would get into wage negotiation only after production resumes at the plant.

The Chakan plant employs 1,486 workers, of which 900 are permanent, 364 are trainees, and the rest are part of the “learn and earn" employment-promotion programme run by the state employment exchange.

Since the strike began, Bajaj Auto has suffered a production loss of 25,000 units, Kailash Zanzari, vice-president of manufacturing at the firm had said on 25 July in a phone interview. However, he added there was no shortfall in dispatches to dealers.

Bajaj Auto officials didn’t comment on the production losses on Monday. The company has been meeting its requirements by producing some of the Pulsar and Discover models from its Waluj plant.

“If we decide to shift production to Waluj and Pantnagar in the foreseeable future the proposal would be put as one of the agendas in company’s forthcoming board meeting on 24 September," said Bajaj.

Rajiv Bajaj should talk to employees to resolve the issue instead of threatening to move production out of Chakan, said Dilip Pawar, president of VKKS.

“They always threaten to move out when there is a crisis. They shouldn’t be saying this when we are willing to talk," said Pawar. “Why run away from the problem instead of facing it. Last time Mr. (Rajiv) Bajaj spoke to us and the issue got sorted. He should talk to us."

In 2007, Bajaj Auto’s decision to shut down production of scooters citing its falling demand at Akurdi, had triggered protests from employees who had accused the company of wanting to commercially exploit the value of the land.

Bajaj, then, had asked the Akurdi employees “to sit at home and still draw a salary". The average age of these employees was 50. The employees eventually asked the company to offer a VRS.

On Monday, Bajaj said even though the reasons for the labour strife in both the cases is different, “the outcome unfortunately would be the same if production doesn’t resume in Chakan". However, unlike the Akurdi workers, the VRS package for Chakan workers (most of whom are in their 20s) “would not be handsome", he added.

Pawar said “all of us are willing to toil and earn. We don’t want to sit at home and draw a salary."

Shares of Bajaj Auto fell 1.76% to 1,874.80 on BSE on Monday. The exchange’s benchmark Sensex rose 0.10% to 19,182.26 points.

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